A sergeant takes oath during the inauguration of a police battalion in Baghdad. (AFP)

Baghdad, March 1 (Reuters) : Iraqi leaders agreed on an interim constitution today after marathon talks to paper over ethnic and religious disputes that might have obstructed US plans to return power to Iraqis by June 30.

The document will be officially signed on Wednesday after the 25 members of the US-appointed governing council had missed a February 28 deadline to reach a deal because of divisions over the role of Islam, quotas for women in government and Kurdish demands for autonomy.

“This is a major achievement, only a day late, which I think is terrific,” said US secretary of state Colin Powell, who expected US governor Paul Bremer would approve the document. Officials said the law recognised Islam as Iraq’s official religion and specified it would be a source of legislation but not the primary source, as had been demanded by many in Iraq’s 60 per cent Shia majority.

A senior official in the US-led administration said the compromise “strikes the right balance” between the Islamic identity of most Iraqis and the need for freedom of religion and speech, enshrined in a bill of rights in the document.

“The language on Islam and the state effectively says that this won’t compromise individual rights or democratic principles,” the official said. The bill of rights would be virtually impossible to change or strike from the future constitution, council member Adnan Pachachi said.

The document also backs a federal state and recognises the northern zone Kurds have run since wresting it from Baghdad’s control after the 1991 Gulf War, one element of a bid for autonomy that some Arabs fear will split Iraq.

Rowsch Shways, who represented Kurdish Council member Massoud Barzani in the talks, said it met Kurds’ demands that their “peshmerga” militias remain as a Kurdistan national guard rather than as part of a national army.

The document also recognises Kurdish as an official language alongside Arabic.

The document says elections for a transitional assembly should be held ideally by the end of 2004, or by January 31, 2005, at the latest. That assembly will then work on a constitution and plan full elections by the end of 2005.

Washington’s initial plan was for elections by the end of 2005 but Iraq’s most revered Shia cleric, Ayatollah Ali al-Sistani, demanded polls be held sooner. Sistani wanted the government which will take over on July 1 to be elected, but softened his stance after the UN said it was impossible to organise polls so fast.